What happens to a home when it is seized by the Federal Government in regards to a criminal Fed. Court Case?
There is a townhome in my neighborhood that was seized by the gov. because the homeowner was convicted of mail fraud. I don't understand why there was a sheriffs sale and a 6 mos. redemption period if it was seized to pay restitution. There wasn't a mortgage on the property, it was paid for. I thought in a Federal Forfeiture there was no redemption period? There is currently close to 100K in leins on the property, would those influence the type of sale on the property?
Answer:
Internal Revenue Code §7426(a)(1) provides:
Section 7426 permits a third party to bring an action challenging the lawfulness of governmental levies made against property in which he claims an interest. Interfirst Bank Dallas, N.A. v. United States [85-2 USTC ¶9635 ], 769 F.2d 299, 304 (5th Cir. 1985), cert. denied, -- U.S. --, 106 S. Ct. 1458 (1986); see Crow v. Wyoming Timber Products Co. [70-2 USTC ¶9561 ], 424 F.2d 93, 96 (10th Cir. 1970) (dictum).
Congress has specifically waived sovereign immunity for actions under §7426 through the enactment of 28 U.S.C. §1346(e). Thus to the extent that a party claiming an interest in property is aggrieved by the pendency of an existing lien, sovereign immunity is waived. See Three M Investments, Inc. v. United States [86-1 USTC ¶9185 ], 781 F.2d 352, 354 (10th Cir. 1986).
This conclusion does not change merely because the district court exercised ancillary jurisdiction. Ancillary jurisdiction permits the district court to exercise the full range of its civil and criminal jurisdiction.
Federal law governs the priority of a tax lien against other claims to property. United States v. Equitable Life Assurance Society [66-1 USTC ¶9444 ], 384 U.S. 323, 328 (1966). Where Congress has not prescribed a different priority rule, see I.R.C. §6323 , the basic rule is "first in time is first in right." See United States v. City of New Britain [54-1 USTC ¶9191 ], 347 U.S. 81, 85-86, (1954).
Therefore, a tax lien is junior to only those liens that not only attached to the asset, but also became sufficiently choate before the tax lien arose. See id. And choateness of a competing interest is also a matter of federal law. See United States v. Pioneer American Insurance Co. [63-2 USTC ¶9532 ], 374 U.S. 84, 88-89 (1963).
What this means for your question is that IF the lien is attached to the seized property, it must be satisfied even before a U.S. IRS Tax lien.
A very good document to read on the issue of what happens to the property is here: http://www.usdoj.gov/ag/readingroom/seiz...
Yes, They would.
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